With benefits open enrollment season, employees at U.S. companies are faced with making decisions regarding choices for health care and other benefits plans for 2012. HR can prepare employees at their organizations to expect to see examples of the following benefits trends and can communicate a series of messages to encourage appropriate benefit selections.
Among the trends employees should be made aware that they are likely to confront:
• Health care costs continuing to rise. Overall health care costs are expected to rise 7 percent in 2012 to $10,475 per employee vs. $9,792 per employee in 2011, according to Aon Hewitt's research. While employers continue to fund the majority of this cost, employees are projected to contribute $2,306 on average in 2012 to the overall health care premium, an increase of nearly 11 percent over 2011. Complicating matters for employees is the fact that they will spend an average of $2,275, in additional out-of-pocket costs while seeking care in 2012, according to Aon Hewitt's analysis. (To learn more, see the SHRM Online article "Per Employee Health Coverage to Cross $10,000 Threshold.")
• Employers encouraging employees to take responsibility for their health. More employers are offering tools—such as health risk assessments and blood pressure and cholesterol screenings—to raise awareness of personal health status among employees and their family members. In addition, many employers offer programs to assist employees in addressing health risks and chronic conditions, such as programs to manage diabetes better or quit smoking. In many cases, employers offer incentives (e.g., enhanced medical coverage benefits or reduced premiums) to encourage employee and family member participation. (To learn more, see the SHRM Online article "Meeting the Health Risk Assessment Challenge.")
• Increasing employee accountability to manage health care usage and expenses. More than 50 percent of employers surveyed by Aon Hewitt offer consumer-driven health plans (CDHPs) that include health savings accounts (HSAs) or health reimbursement arrangements (HRAs). HSAs can be funded with employee and/or employer contributions and are paired with higher-deductible health plans, while HRAs are funded only with employer contributions. With either type of plan, employees can access their individual accounts to pay for out-of-pocket health care costs, controlling how and when they use these funds. These plans typically encourage employees to use health care more efficiently, while still protecting against significant/catastrophic expenses. (To learn more, see the SHRM Online article "Consumer-Driven Decision: Weighing HSAs vs. HRAs.")
What Employees Want
"When it comes to choosing and using their employers' health care plans and programs, workers want their employers to do four things, said Joann Hall Swenson, health engagement best practice leader with Aon Hewitt: These are:
• Make it easy to do.
• Make it personal so I know how to get the best value.
• Make it move me in the right direction.
• Make it meaningful so I feel supported as I try to improve my health.
"Employers who craft their health engagement strategies around these four insights will have a chance at reaching and engaging their employees, which in turn will lead to improved health and productivity and reduced cost," Swenson said.
Advice to Give Employees
"The most important advice we can provide to an employee is to be an active participant in the open enrollment process," added Craig Rosenberg, Aon Hewitt's national practice leader for health and welfare benefits administration. "Health care needs and benefit costs can vary from year to year, and when you combine that with the changing health care landscape, it's critical for employees to educate themselves on their available coverage and re-evaluate their choices."
To help employees make effective decisions and get the best value, based on their needs, Aon Hewitt suggests communicating the following messages to employees during open enrollment.
Assess Your Needs
As part of an employee benefits needs assessment:
• Review this year's health care use vs. known expectations for next year. For example, consider how much you spent out of pocket on co-payments and co-insurance, the number of times you visited the doctor and the cost of medications you take on a regular basis. If you are participating in a health care flexible spending account (FSA), evaluate whether you contributed too little or too much this year based on your actual expenses. Consider which dependents you will need to cover in 2012 and remember that health care reform allows coverage for adult children through age 26 in most cases.
• Take a holistic view of how you are spending your benefit dollars. If you are not contributing to your 401(k), is there an option to reduce your spending in another area to ensure you are planning for retirement? If available, use tools such as online retirement modeling and health care cost estimators to help you to make trade-off decisions among your benefits options and help evaluate the total cost (contributions plus out-of-pocket) of available health plan choices. Remember, the plan with the lowest employee contribution amount might not end up being the lowest cost plan based on your health care usage.
Take an Active Role
Taking an active part in benefits enrollment means you should:
• Make sure you understand what's changing. Even if your current health coverage is available in 2012, there could be changes to costs and plan design elements, such as deductibles and co-insurance amounts. Don't assume that your current coverage is still the right choice. There could be new options that meet your needs better.
• Review your employer's rules related to dependent eligibility for coverage. An increasing number of employers are conducting dependent eligibility audits to make sure that only people who are eligible are covered by the company's plan. Conducting these audits can help preserve an employer's ability to offer affordable coverage.
• Verify that doctors or other providers you plan to visit participate regularly in the health plan you select. There can be changes in plan participation, and you might place a high value on maintaining the relationship established with your providers. Most employers provide access to search tools to determine quickly if a provider participates in your available health plan choices.
Save Money Wherever You Can
Many employers provide a number of ways to reduce benefits costs while helping employees achieve or maintain good health. Often, employees pass up these opportunities simply because they don't realize they are available. Common cost savings opportunities include:
• Health/wellness incentives. By completing a health risk questionnaire or getting your blood pressure checked, you might be eligible for a cash incentive or a lower health plan premium. In some cases, your spouse or partner might be eligible for an incentive. Conversely, some employers assess a penalty for not completing these actions.
• Consider whether a plan that includes an HSA or HRA might meet your needs. These plans might be available from your employer at a lower cost than other coverage and can generate additional savings through active management of your health care use. For example, while HSAs are paired with higher-deductible medical coverage (minimum of $1,200 deductible for individual and $2,400 for family in 2012), you can offset this deductible by contributing to the HSA on a pretax basis. This saves additional money by lowering your taxable income. Funds in your HSA can be used to pay for qualified health care expenses, earn tax-free interest and grow over time, with no "use it or lose it" rule. To help you spend wisely, many health plans offer tools that provide information on physician and treatment costs.
• Health care FSAs. You can set aside pretax money for health care expenses through a health care flexible spending account. This creates savings by reducing your taxable income. Be sure to do an assessment of how much you think you'll be spending on out-of-pocket health care in the next year, as any unused amount is forfeited. In addition, note that over-the-counter medications require a prescription in order to be reimbursed from the FSA (as well as from HRAs or HSAs).
• Spouse/partner coverage. Consider whether it is more cost-effective for your spouse or partner to enroll in coverage under their employer's health plan. In some cases, you might pay a surcharge if you cover a spouse or partner who has access to health coverage through their employer.
Stephen Miller, CEBS, is an online editor/manager for SHRM.
Related Open Enrollment Articles:
What’s the Rush? Employees Want Time to Mull Benefits Choices, SHRM Online Benefits Discipline, October 2011
Employees Make Avoidable Benefits Mistakes, SHRM Online Benefits Discipline, September 2011
Gen Y: Employers Get Low Marks for Benefits Communications, SHRM Online Benefits Discipline, September 2011
Open Enrollment: A Chance to Boost Employee Morale, SHRM Online Benefits Discipline, September 2011
Five Tips for Open Enrollment Communications, SHRM Online Benefits Discipline, August 2011
Most U.S. Employers Opt for 'Passive' Open Enrollment, SHRM Online Benefits Discipline, August 2011
Benefits Statements Can Spotlight Hidden Value, SHRM Online Benefits Discipline, April 2011
Communicating Your Benefits Value Calculus, SHRM Online Benefits Discipline, April 2009
Tips for Upgrading Your Total Rewards Communications, SHRM Online Benefits Discipline, January 2008